Three quarters of councils face huge financial pressures

A new Local Government Authority (LGA) survey has found that almost three quarters of responding councils felt that it will be very or fairly difficult compared to earlier years to set a balanced budget for 2025-26, with one in four responding councils saying they have or are likely to apply for Exceptional Financial Support to set a balanced budget in 2026-27.

Published ahead of the Spending Review set to come tomorrow (Wednesday 26th March 2025), the new LGA survey reveals the pressures that continue to perpetuate financial burden for councils and risk severely limiting their ability to deliver on the government’s reform and growth agenda.

The online survey was distributed in January 2025 and received 105 responses, a response rate of 33 per cent.

The LGA, representing councils across England, said the Spending Review with be critical for the future of local services as councils in England are facing a shortfall of more than £8 billion by 2028-29.

Although the government has provided a boost for councils this year which has helped meet some of the cost and demand, significant pressure remains, with the survey finding that two in ten responding councils were either not very or not at all confident that they had sufficient funding to deliver all their statutory duties in 2025-26. This figure more than doubles to 50 per cent in 2026-27.

The LGA warns that further budget cuts will affect the most vulnerable members of communities and the services they rely on every day.

Only three per cent of participating councils said that the government’s extra funding to compensate for the NICs increase will cover the entire direct costs, while almost four in ten say half for heir direct costs will not be covered.

Councillor Louise Gittins, LGA Chair, said: “Councils are the backbone of our country. Every day across the country, our dedicated councillors and officers work tirelessly to ensure our most vulnerable are kept safe. We help get our children to school, and work with parents to gain the extra help their child needs. We help those most in need of trying to secure a safe place to live and we drive to keep on top of road maintenance to keep our country moving.

“Every critical service a council provides needs to be funded properly. Without adequate funding the consequences for so many people who rely upon them could be devastating, but it will also be impossible for them to help the government achieve its reform and growth agenda.

“The time for sticking plasters and emergency government bailouts needs to come to an end.

“While the economic landscape is clearly challenging for government, the Spending Review must provide a long-term plan to adequately fund councils so they can provide the services communities rely on, and for them to play their critical role in bolstering growth and turning the government’s reform agenda into a reality.

“Councils stand ready to work with government to make real change happen for people in local communities. Only by working together as equal partners can central and local government meet the fundamental long-term challenges we face as a country.”